Good Q2 results drive FMCG majors into ad-madness

For instance, the Godrej group is hiking its advertising spend by 30 per cent across all companies in its fold this year, while ITC Foods is increasing its ad budget by 70 per cent to woo new consumers. Last year, Godrej Consumer Products Ltd (GPCL) and Godrej Industries had spent over Rs 68 crore on advertising, while ITC Ltd’s ad spend stood at Rs 225.73 crore.

Yet another FMCG major, Marico, is also planning to increase its ad spend from 8 per cent of total sales to 12 per cent this year. Rival Dabur India, too, is hiking its budget 15 per cent to pump up volumes. Last year, its ad spend stood at Rs 151 crore. Clearly, companies are vying to gain visibility in this overcrowded sector. The Rs 69,000-crore FMCG industry has registered healthy sales growth across categories in Q2 of the current financial year.

According to analysts, the big companies are hiking their ad budgets to further boost sales. “Compared with the last financial year, ad budgets now seem to be on the rise. We expect an average 25 per cent hike this year,” an analyst said.

Along with its brand identity makeover, the Rs 6,200-crore Godrej group is planning to increase its ad budget 30 per cent this quarter. As for Hindustan Lever Ltd (HLL)’s strategy, D Sundaram, director-finance, said, “To boost sales, we will continue to invest in advertising & promotions (A&P). Advertising will continue to be the larger chunk of our A&P spend.” HLL’s ad spend stood at Rs 1,005.67 crore in 2005 compared with Rs 835.98 crore in 2004.

On Dabur India’s advertising plans, Amit Burman, chief executive officer, Dabur Foods, said the company was increasing its ad spend by 15 per cent to popularise its brands in this financial year. “We will be spending an equal amount on mass media ads as well as below-the-line advertising for Dabur Foods,” he added.

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